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Market Outlook
USDCHF Breaking Key Level, Reaching Top Level Since Christmas

USDCHF Breaking Key Level, Reaching Top Level Since Christmas

07-01-2022 07:42

USDCHF Closed Bullishly and Break Its Daily Resistance

Yesterday, USDCHF closed with a strong bullish trend and successfully breaking the key level at 0.91900. The main reason of this bullish is the Fed decision to increase US interest rate. Moreover on last Wednesday FOMC, Fed gave hawkish signal that leads to appreciation value for USD. On the other hand, Switzerland’s economy is also good; with Manufacturing PMI data at 62.7 that exceeds the expectation on 58.6. Analysts also believe on a stronger Switzerland’s unemployment to decrease from 2.5% to 2.3%.

Quick Recap on USD/CHF

TL;DR: USD/CHF is in a consolidating area, where buyers and sellers are battling. It’s all because of the hawkish economy condition for both parties.

Let’s dive in a little deeper to see how USD/CHF fare on multiple timeframes:

USD/CHF Monthly Technical Analysis

USDCHF Breaking Key Level, Reaching Top Level Since Christmas
Graph taken from TradingView.

From the monthly timeframe, we can confirm that this pair is in a choppy-consolidating area. Last month, the December candle, closed bearishly, but failed to break November’s low. Now, on early January, this monthly candle shows us a bullish dominance, but still in a ranging area, unless it can break above 0.93200 that seems a little bit far from now.

USD/CHF Weekly Technical Analysis

USDCHF Breaking Key Level, Reaching Top Level Since Christmas
Graph taken from TradingView.

The weekly timeframe shows us a clear sign that this pair is in a triangle pattern and about to pop; breaking the up-trendline or the down-trendline. It respecting the up-trendline since January 2021 and keep creating higher lows on the weekly. In the same time, this pair also create lower high structure since April 2021. This weekly candle is about to close in hours soon, and seems like it could closed bullishly after breaking the previous weekly candle high. Let’s see where it pops to the upside or the downside.

USD/CHF Daily Technical Analysis

USDCHF Breaking Key Level, Reaching Top Level Since Christmas
Graph taken from TradingView.

While in the daily timeframe, USDCHF is firmly breaking the resistance at 0.91900. After rejecting weekly support on 0.91150, it creating the support at 0.91600 area and continue to break the daily key level. Right now, this pair is ready to test the next daily resistance at 0.92500. But please note that on this particular area, there is multiple daily rejections that could be a sign of a strong resistance on 0.92500.

Trading idea for USD/CHF

USDCHF Breaking Key Level, Reaching Top Level Since Christmas
Graph taken from TradingView.

On the 4-hour timeframe, we can see a huge fake-out and now it ready to bounce to the north. It could create a break and retest pattern. The trading idea is:

Order: Buy Limit
Entry: 0.91880
Stop Loss: 0.91670
Target 1: 0.92190 (50% + BE)
Target 2: 0.92500 (25%)
Target 3: 0.92660(25%)
Risk total: 1-2% Equity (Medium Risk Setup)
Reason: Break and retest with bullish structure on H4.

ZFX Analyst’s Predictions

The US and Switzerland economy is stronger for both from fundamental area. We already discuss about interest rate hike for US earlier and several economy aspects show a positive sign for CHF. But from the technical analysis, we can confirm that this pair is already broke the daily resistance and might continue bullish to the next daily resistance. But we might see a higher USDCHF rate if the Fed would execute the tapering soon on March with interest rate hike. This pair might continue bullish until first quarter of 2022.

Risk Warning: The above content is for reference only, and does not represent ZFX’s position. ZFX does not assume any form of loss caused by any trading operations carried out in accordance with this article. Please be firm in your thinking and do the corresponding risk control.

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